Contracts, regulations, compliance, entity structures, zoning, permits, and landlord-tenant law.
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Foundation terms you need to know first (89 terms)
Development costs are all the expenses incurred during the process of acquiring land, designing, constructing, and preparing a real estate project for use or sale, from start to finish.
Base rent is the fixed, minimum rent amount paid by a tenant to a landlord for the use of a property, excluding additional charges like operating expenses, taxes, or utilities.
An absolute auction is a type of real estate auction where the property is sold to the highest bidder, regardless of the price, with no minimum bid or reserve price set by the seller.
The Lease Commencement Date is the official date specified in a lease agreement when the tenant's rights and obligations, including rent payments and property responsibilities, legally begin.
An application fee is a non-refundable charge paid by a prospective tenant to a landlord or property manager to cover the costs associated with processing a rental application, including background and credit checks.
Complex strategies and professional concepts (117 terms)
An Equity-for-Property Swap is an advanced real estate investment strategy where an investor exchanges equity in one or more properties or entities for direct ownership of another property, often to achieve tax deferral, portfolio restructuring, or strategic asset acquisition.
The accounting process of recognizing the estimated cost of an Asset Retirement Obligation (ARO) as a liability and capitalizing a corresponding asset, which is then depreciated over its useful life, reflecting the future costs associated with retiring a long-lived asset.
A legally binding contract that alters the priority of liens on a property, allowing a senior lienholder to voluntarily place their claim in a junior position to another, typically to facilitate new financing or complex transactions.
Unrelated Business Income Tax (UBIT) is a tax levied on the net income of a tax-exempt organization, including certain real estate investment vehicles, derived from a trade or business regularly carried on and not substantially related to its exempt purpose.
Inverse condemnation is a legal action initiated by a private property owner against a government entity to recover "just compensation" for a taking of their property, where the government has not formally exercised its power of eminent domain but has effectively deprived the owner of beneficial use or value.
Financial transparency in real estate investing refers to the clear, accurate, and timely disclosure of all financial information related to an investment property or entity, fostering trust and informed decision-making among stakeholders.
A financing contingency is a clause in a real estate purchase agreement that makes the sale conditional upon the buyer securing a mortgage loan, protecting the buyer's earnest money if financing falls through.
A flexible lease is a rental agreement that offers adaptable terms regarding duration, termination, or rent adjustments, providing greater versatility for both landlords and tenants compared to traditional fixed-term leases.
A folio number is a unique identification code assigned to a specific parcel of land or property by local government agencies, primarily for record-keeping, taxation, and legal purposes.
For Sale By Owner (FSBO) refers to the process of selling a property without the representation of a real estate agent or broker, allowing sellers to potentially save on commission fees.
Foreclosure is the legal process by which a lender takes possession of a property when the borrower fails to make mortgage payments, leading to the sale of the property to recover the outstanding debt.
A foreclosure auction is a public sale where properties are sold to the highest bidder to satisfy a mortgage debt in default. These auctions offer opportunities for investors to acquire properties, often below market value, but come with significant risks and require extensive due diligence.
The foreclosure process is the legal procedure by which a lender repossesses a property from a borrower who has defaulted on their mortgage, typically leading to a public sale to recover the outstanding debt.
The foreclosure rate is a key economic indicator representing the percentage of mortgage loans that are in some stage of foreclosure within a given period, reflecting housing market health and financial distress.
Foreign qualification is the legal process by which a business entity, such as an LLC or corporation, registers to conduct business in a state other than its state of formation. It grants the entity the authority to operate legally and access local courts in the 'foreign' state.
A forensic audit in real estate is a detailed examination of financial records and operational procedures to uncover discrepancies, fraud, or mismanagement, often used in legal proceedings or dispute resolution.
Form 6252 is an IRS tax form used by real estate investors to report income from an installment sale, where at least one payment for the property is received after the tax year of the sale. It allows for the deferral of capital gains tax until payments are actually received.
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